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Asia ex-Japan's mutual fund assets to reach all-time high in 2010, signaling quickest recovery

Friday, February 05, 2010
Opalesque Industry Updates - . Asia ex-Japan's mutual fund assets are set to reach more than US$1.1 trillion by the end of 2010, exceeding their 2007 all-time peak. This region leads the global recovery, according to the latest issue of the Cerulli Edge—Asia-Pacific Edition, a quarterly publication dedicated to this region. The rise would represent a rally of more than 54% from 2008 levels—a year when the swinging impact of the global financial crisis wiped US$350 billion off Asia ex-Japan's mutual fund assets.

The recovery in 2009 was largely due to rapidly rising stock markets rather than improved net new investment, but if asset markets remain stable, investor flows are expected to improve in 2010.

“It would be wrong to gloss over the crisis-induced 2008 bust too lightly,” said Sunil Jagtiani, associate director at Cerulli Associates. “It was undoubtedly a uniquely painful event. In Asia, it is definitely time to look forward, not back. We expect Asia's asset management industry to make up the ground lost in the financial crisis more quickly than many other parts of the world,” he said.

One of the consequences of the financial crisis is that the opportunities across the key mutual fund markets in Asia ex-Japan are better balanced. In 2007, China's mutual fund assets were double that of its nearest rival, South Korea. They were also 334% larger than India's and 305% larger than Taiwan's.

But these percentages changed drastically in 2009. China's mutual fund assets were 28% bigger than South Korea's, 140% larger than India's and 235% greater than Taiwan's. This change was due to a few possible factors. The rival nations to China lost less assets, recovered more strongly, or a combination of both.

Global managers would do well to consider this change carefully, and note that institutional asset gathering opportunities are also increasing in the Asia ex-Japan sector, such as in the pension sector.

Other findings from this issue include:

Asia ex-Japan is set to surpass its 2007 peak level of mutual fund assets in 2010 as the region leads the global recovery, with flows set to improve if markets stay stable.

China continues to boast the region's biggest mutual fund market, but its lead over its nearest rivals has been drastically cut by the financial crisis, indicating a more balanced opportunity set.

Institutional business is growing in significance, with some firms tilting resources and manpower to better serve the sector, thereby building a more balanced asset management business.

To receive a copy of the issue, please contact Marketing& Business Development at CAmarketing@cerulli.com or +1 617-437-0084. kb

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